It was little more than a year ago when Group Health Cooperative announced it would close its Redmond hospital in the next few years and...

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It was little more than a year ago when Group Health Cooperative announced it would close its Redmond hospital in the next few years and send acute-care patients to Overlake Hospital Medical Center in Bellevue.

Now, Group Health officials say they are unsure of what lies ahead for the hospital and intend to hang on to the licenses for those beds.

This stance thrust Group Health back in the spotlight this week after the state Department of Health rejected applications by Overlake and Swedish Medical Center, which are vying to build a new hospital in Issaquah.

After months of review, the state decided a new hospital wasn’t necessary because there were enough beds in the region to serve residents for the next 10 years.

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Controversy arose from Monday’s decision when Swedish and Overlake officials discovered that the state included 132 available beds from Group Health in its calculation — despite the cooperative’s declaration that it would stop taking patients by mid-2008.

The addition of those beds tipped the scales in favor of not building a hospital, Swedish and Overlake officials say. Swedish says it will appeal the denial based on this.

Group Health officials say those beds should be counted because, even though the HMO plans to close its hospital and transfer overnight patients to Overlake by April 2008, it’s possible that the future of its inpatient care could shift gears between now and then.

The licenses “are a very valuable asset,” said Don Glickstein, Group Health spokesman. “What are we going to do with (the beds) after 2008? At this point, we don’t know. But we’re keeping these assets because we’re keeping our options open.”

Some see the move as political and say Group Health acted to keep Swedish, the state’s largest health-care provider, at bay on the Eastside, while building an alliance with Overlake. Group Health intends to buy a parcel of land this year near the Overlake campus for a new $110 million to $120 million specialty center. Group Health started sending its maternity patients to Overlake in 2002.

Its Redmond campus now houses a primary care center, a specialty center and a hospital. Group Health plans to open a new primary care center in late 2007 in Redmond.

“Group Health is holding an important card,” said Diane Sosne, a registered nurse and president of Service Employees International Union District 1199 Northwest, which represents about 8,000 employees at Swedish and Group Health.

The state’s decision “keeps Swedish out of Overlake’s back yard. Group Health is hanging on for political purposes. We had no information from them that they were planning on using (the licenses) for inpatient beds,” she said.

Group Health denies the move is political and says it’s merely looking to invest its resources to be more cost-effective. Technological advances in medicine have cut hospital stays over the years, which is why Group Health decided to partner with Overlake, Glickstein said.

“People don’t need hospitals like they used to,” he said.

The state denied the Overlake and Swedish proposals based on calculations that showed the Issaquah area will have 677 available beds by 2007 among four area hospitals, including Overlake, Snoqualmie Valley Hospital, Group Health and Evergreen.

Swedish and Overlake both proposed having a new hospital up and running by 2009 — a situation that would create a glut of beds for eight years, according to the state’s analysis.

Sonia Krishnan: 206-515-5546 or skrishnan@seattletimes.com